Are franchise deposits refundable?

There is no rule as to whether a deposit should be refundable and the answer will ultimately be down to the bargaining position of the parties.Franchise deposits are usually collected by the franchisor prior to a franchisee entering into a franchise agreement and, depending on what is agreed between the parties, it can either be fully, partially or non-refundable. In many cases, a deposit will be refundable if a franchise agreement is not signed, subject to the franchisor deducting the reasonable costs involved in carrying out negotiations with the prospective franchisee.The important point for a franchisee is that, whatever is agreed in relation to the deposit, it is documented in writing. In addition, a franchisee should ensure any deposit paid is credited towards any initial fee payable under the franchise agreement, if the franchise agreement is entered into.